What is a Pre-Commitment & How Can it Help Me?

A Pre-Commitment can make an offer to a homeowner more attractive and thereby increase the chances of getting your dream home!

In this video, Jeff & Jason talk about the power of the Pre-Commitment and what it could mean for you and the seller. While it is often very hard to compete with a Cash offer, an offer with a Pre-Commitment will give you a fighting chance.

If you are thinking about buying or selling a home, then Jeffrey Chubb of the Chubb Realty Group and Jason Bonarrigo of RMS Mortgage can help guide you through the process. Give Jeff a call at 617-480-2600 or send hi an email at [email protected]. You can reach Jason at 617-413-5038 or by email at [email protected].

Transcript:

- Hi, I'm Jeff Chubb with the REN network, and today we're here with Jason Bonarrigo of RMS mortgage and we're talking about the pre-commitment. Now there's a difference between pre-qualification, pre-approval and then this pre-commitment. That's where we really want to dive in today. Ultimately, why should I get a pre-commitment? Who is it for? So, tell me what is a pre- commitment?

- Well, first of all, it's just a little bit more extensive than your normal pre-approval.

- Okay. Which is obviously just kind of not a quick certification, but we can do that pretty quickly. We can do that in 10 minutes sometimes or in 24 hours.

- And you're doing that? It's just, you?

- It's just me. No, exactly. Great point. So the difference between obviously the pre-approval and the pre-commitment is we're actually taking the time and we're sending it into the underwriting department to truly have it underwritten and stamped.

- Right.

- There is no going back seasons.

- Where they comb through the financials.

- They go through the financials. Right. And that may sound overwhelming, but it's really not. I mean, it's the same essential information that you've already given me on the pre-approval. I may ask for a couple more things. You know just some basic stuff pay stubs, W2's, bank statements, all the things that you need to do anyways. And then we have that, we take that, we packaged it up nice as we would, make it beautiful and we submit it into underwriting. So again, when it comes out, it's clean. We know if there's any issues that we have to question at all, we feel good about that. And then basically, essentially your subject to finding a home, which is your job, and then B, getting that appraisal which would be the only thing that we would discuss going forward and making sure the value is there. Its really, really cool, actually.

- So essentially, and this is, I mean, I reached out to you because we've had buyers that put into two, three, four offers and I think somebody has put in one or two offers, right?

- Yep.

- Then and maybe it's time for them to move towards this pre-commitment phase where it ultimately makes them a little bit more competitive in that home buying aspect.

- It can make it a lot more competitive. I mean, I think that's why we talked about that option and that's why obviously good lenders are offering that service. It's just, it's so competitive. We've seen people losing out on homes and 'I don't understand, I have good credit, I'm making these offers and everything looks good, and I'm just not getting them'. Well, sellers they have an abundance to choose from. And maybe it's down payment, maybe it's a quick close. And again, that leads to the other point, we can do maybe a much faster closing now because we're halfway through the process.

- Right.

- It's already been underwritten. It's already been approved. We have all the documentation.

- All we need is the appraisal.

- All we need is the appraisal. So if you call me and normally, if you say, Jay can you do a 20 day closing? I'd say no, but obviously if that's what we need, and these buyers have been out there for months and months and they can't get find the house that they want, then yeah, we have that option. We have a lot more flexibility. And again, you do a great job of letting those sellers know that, look these guys are pretty committed with one of our top local lenders. This is how they feel. They're certified, they're ready to go. And it makes them a lot more competitive.

- You know, I mean, so we have cash offers, cash is King, right?

- Yes.

- And then you have

- It's not good for me though.

- It's not good for you. It can be great for me in that sense, right?

- Exactly.

- We have cash offers.

- Sellers like cash offers.

- Sellers love them. And it's hard to compete with the cash offer.

- It is.

- And we're seeing a ton of cash.

- That's a good point. That ties the knot a little bit.

- So this pre-commitment gets us a little bit closer to that cash offer, where myself as a, you know as an agent, I can say to the seller's agent, the person representing the seller say, hey, look I understand this isn't a cash offer but this is as close as it's going to get. These guys have already been through underwriting. I mean, from them, from their standpoint, they're rock solid.

- It's done.

- All we need to worry about is the house appraising. Right?

- Jeff, that's a great point because I think you and I know we won't mention any names, but we had one a couple of weeks ago where they took the lower bid.

- Right.

- Right? It was a cash offer and they did go with our our buyer who was obviously pre-approved. Now they weren't pre committed, but they were pre-approved. But again, very strong and good buyers but the seller took less money.

- Less money.

- To have that peace of mind for the cash. Now we could debate whether that was the right decision, but Jeff's point is correct. If you're pre committed, you're essentially right there with cash, right?

- Right.

- And a good down payment.

- Just the appraisal, which there can still, appraisals can come and still low so there is a little risk there for the sellers. But you know, if you're $10,000 above the next offer

- Or even more,

- Right.

- In our case, I think it was even more.

- Yeah.

- I mean, that's just a huge benefit you need it in this market, again, when you're seeing in 10, 12 multiple bids on these good homes that are for sale.

- Right. Yeah, things are moving quick. So, the, the pre-commitment, right?

- Yeah.

- So we've gotten the pre-commitment. I mean, does it look any different? So it sounds like it's really up to me in order to really sell and educate the other side in regards to the difference between that pre-commitment and pre-approval.

- Right. We'll make it obviously look a little bit different for the consume so it stands out and basically says that. And we take any of the, kind of the boiler plate stuff off our normal pre-approval so it looks a little bit cleaner and it gives them more confidence.

- Right.

- And then of course you would verbally explain to your partner there or the listing agent, you know, what it entails. And they're going to want to understand it too because again, we'd like to think we run in the same circles,

- And then they can call you too.

- Of course. We get calls all the time. And I actually prefer that.

- Right.

- You know, I talk to some people, 'oh, I'm getting calls from listing agents'. I think it's great. It helps my buyers out. I'd like to think I sound okay on the phone and I make them feel comfortable that no, it just wasn't a quick pre-qual.

- You got a great phone voice.

- I have a great phone voice.

- Face not so much for video. not so much for video.

- Yeah, exactly, Right? What do they say, a face for radio? But, I talk to the listing agents and they feel good about it and they just ask the basic questions. But they get the sense that, A, we know what we're doing, that the buyer's in good hands, and B, they know I've collected all the proper documentation.

- Right. All right, so pre-commitment, what does it get me? It gets me the ability to close a loan faster,

- True.

- Peace of mind that I'm fully approved on that side of it, right?

- Yeah.

- All I have to do is an appraisal, right?

- Yeah.

- Makes me more competitive.

- Much more competitive.

- Where I have a lot higher chance of actually securing the house.

- Yeah.

- Anything else? Am I missing anything?

- Not really.

- Again that peace of mind.

- They're pretty big things.

- Those are three pretty big things. And again, I don't want to stress anyone out. It's not that painful. It's essentially the same documentation as we would with a pre-approval. It just takes a little bit more time but we had that dialogue. We know, hey while you're still looking for homes, we're going to get you on the pre-commitment track so that we can get that done, send it into underwriting, And when it comes out, we're good to go.

- But you're gonna need to give the docs anyway.

- Anyway.

- So you might as well just do it again in the beginning before everything gets really crazy and you've gone under agreement, and you need to do the home inspection, and starting packing your house and you move and all that stuff, right?

- And I'm asking you for 100 documentation. You'd rather have that done to be honest with you.

- Okay. Well, great. Thank so very much for clearing that up.

- Thanks for having me.

- And working with our clients in order to make them more competitive for this pre-commitment. Again, I'm Jeff Chubb with the Chubb Realty Group. We're brokered by eXp Realty. And this is Jason Bonarrigo of RMS Mortgage. Jason, how can they reach you?

- Cell phone is always the best. Shoot me a text, give me a call, 617-413-5038.

- You can always reach us at 617-480-2600 or visit us online at www.Boston2.com. Thanks for watching. We look forward to hearing from you and talk to you soon.